The Dividend Cafe Wednesday - September 18, 2024
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 18 September 2024
⏱️ 5 minutes
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Summary
Fed Interest Rate Cuts and Market Reactions – September 18 Update
In this episode of Dividend Cafe, Brian Szytel from Newport Beach office at TBG headquarters discusses the Federal Reserve's decision to reduce interest rates by 50 basis points, forecasting another 100 basis point cut by the end of 2025. He gives a detailed analysis of the interest rate trajectory, market reactions including Dow's closing, and bond market trends. He also highlights the August housing starts, which exceeded expectations, and upcoming economic indicators like jobless claims and manufacturing data. Brian invites questions and looks forward to the next update.
00:00 Introduction and Welcome 00:11 Federal Reserve Meeting Summary 01:32 Market Reactions and Analysis 02:19 Housing Market Updates 02:47 Upcoming Economic Data 02:59 Conclusion and Sign Off
Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the Dividend Cafe weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. |
| 0:12.1 | Welcome to Dividend Cafe. This is Wednesday, September the 18th, and Brian Saitel with you at Newport Beach office here at TBG headquarters on the Fed day. So today we |
| 0:24.5 | had the conclusion of our Federal Reserve two-day meeting and the Fed reduced interest rates by 50 |
| 0:31.5 | basis points, which is what Fed Futures had priced in the last week or so. And there's another 50 basis points priced in of rate cuts before the end of the year, |
| 0:42.2 | meaning 100 basis points total for 2024, and then another 100 basis points for the year of 2025. |
| 0:49.6 | And if you do the math, that would bring us from currently 5 and a quarter to 5.5. |
| 0:59.7 | Now, as of today, we're at 475 to 5 on Fed funds. |
| 1:06.0 | And if you reduce that by another half point, you're going to be in the 4.5 to 4.5 range by the end of 2024. And if you reduce that again by another 100 basis points, you're somewhere around 3.5 to 3.5 |
| 1:13.6 | by the end of next year. And as we've spoken about, a few different times, if you think that |
| 1:19.2 | the appropriate neutral rate, which is not restrictive and not stimulative to the economy, |
| 1:24.1 | somewhere around a 1% real rate, meaning 1% above inflation, that 3% handle is |
| 1:30.1 | around the number that will probably get us there. The question is just whether anything |
| 1:35.7 | falls out of bed in the meantime. And I have to say so far, so good in this endeavor, as far as |
| 1:41.8 | that soft landing that the Fed is hoping to manufacture. |
| 1:44.9 | So there you have it for Fed Day. |
| 1:46.8 | On the market itself, the Dow actually ended up closing down 100 points. |
| 1:51.0 | You know, following the news that came out around 11 Pacific where I am in Newport Beach, |
| 1:55.2 | markets were up, you know, initially, but they were, you know, hypervolatile. |
| 1:58.3 | There's a picture of it in a dividend cafe for you to look at on the |
| 2:01.8 | chart of the Dow for the day. But essentially, as I would have thought, the shine tends to wear off a little, |
| 2:08.2 | and it's the buy the rumor, sell the news. When you get the actual happening of what was good news |
| 2:14.0 | already priced in, then there's a little bit of alleviation on what was ahead |
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